Estimation of 1-Year Changes in Medicaid Expenditures Associated With Reducing Cigarette Smoking Prevalence by 1

Reducing smoking is associated with a reduction in health care costs, including in the short run. Medicaid recipients smoke at higher rates than the general population, which suggests that investments to reduce smoking in this population would reduce short-run Medicaid costs.

To estimate the short-run (1-year) change in health care expenditure associated with a 1% decrease in absolute smoking prevalence in all US states.

Economic evaluation based on state Medicaid expenditures and the elasticity between changes in smoking prevalence and health care costs. Data sources were the 2017 Behavioral Risk Factors Surveillance System, 2017 National Health Interview Survey, and Kaiser Family Foundation Total Medicaid Spending for fiscal year 2017. Analysis was conducted in 2018. Participants were all people receiving Medicaid in all US states and the District of Columbia.

Cigarette smoking.

Short-run (1-year) change in health care costs.

Reducing absolute smoking prevalence by 1% in each state was associated with substantial Medicaid savings the following year, totaling $2.6 billion (in 2017 dollars). Each state saved a median (interquartile range) of $25 million ($8 million to $35 million).

Effective efforts to reducing smoking could be a cost-effective way to reduce Medicaid costs in the short run.